South Africa: Common Monetary Area 2014/15 Budgets Overview

Each of the Common Monetary Area (CMA) Member States presented
their 2014/15 Budgets during February 2014. An overview of the
Budgets of Lesotho, Namibia and Swaziland reveals Namibia as the
only country proposing fiscal amendments of any significance. A
common theme of these Budgets is a concern about the increased
uncertainty regarding the future of the South African Customs Union
(SACU) and a firm intention to reduce reliance on SACU revenue.

Lesotho

The Minister of Finance, Dr Leketekete Victor Ketso, presented
the 2014/15 Budget on 20 February 2014.

Government expenditure for 2014/15 is estimated at M15.4 billion
(a 7.6% increase from the 2013/14 Budget), of which M10.4 billion
is allocated to recurrent expenditure and M5 billion to capital
expenditure. The Minister admitted that the growth of the wage bill
is alarming and proposed an across-the-board increase in public
sector salaries and wages of only 4 percent, despite the projected
inflation rate of 6 percent.

The proposed financing of this Budget is estimated at M15.7
billion. This will include domestic tax revenue of M6.3 billion,
M1.3 billion non-tax revenue, M7 billion from the SACU and M1
billion through budget support, donor grants and loans to achieve
the proposed overall fiscal surplus of 1.3 percent of GDP.

Given the volatility surrounding the SACU revenue, it is
proposed that, to the extent possible, SACU receipts are restricted
to the investment budget and additional domestic revenues be
mobilised to reduce dependence on SACU.

A draft minerals and mining policy is currently under review and
expected to be finalised during the first half of 2014. With the
assistance of the International Monetary Fund (IMF), the Government
reviewed the fiscal regime governing the mining sector and it is
expected that a new mining tax regime will be finalised as part of
a wider review of the mining code.

A geological survey to determine the country's potential
mineral resources will be advanced and a feasibility study will be
conducted in 2014/15 for the establishment of a diamond centre,
which will provide facilities for the sale of raw diamonds, cutting
and polishing. The construction of the Letaeng cutting and
polishing centre, aimed at supporting local production and
beneficiation, has been completed and awaits agreement with
Government on its operation.

The Money Transfer and Forex Regulations and Credit Reporting
Regulations have been promulgated during the past year and the
Insurance and the National Payment Systems Bills are being
considered in Parliament and expected to become laws by end of
2014.

It is admitted that Lesotho's 'Doing Business'
ranking is still very low at 136 out of 189 countries, which
compares unfavourably with the rest of the sub-region. To improve
the investment climate, Government intends to pursue legislative
and regulatory reforms, including development of an investment
policy.

To reduce the personal tax burden and encourage tax compliance,
the Budget proposes reduction in both the lower and upper personal
income tax rates, from 22 to 20 and 35 to 30 percent,
respectively.

It is proposed that the 15 percent Value Added Tax (VAT) rate on
alcohol and tobacco be abolished in order to simplify the VAT
system. With the exception of zero-rated items, electricity and
telecommunications (which is subject to VAT at 5 percent), all
items will be taxed at the standard VAT rate of 14 percent. To curb
abuse of alcohol and tobacco that could possibly arise from a
reduction in the cost to consumers it is proposed that an
additional 4 percent levy be imposed on purchases of these two
items.

In order to promote regional integration and eliminate unfair
competition, it is proposed to abolish the zero corporate tax rate
on extra-SACU exports and the standard 10 percent rate to apply to
all manufacturers.

Namibia

Namibia's 2014/15 Budget presented on 19 February 2014 by
the Minister of Finance, Ms Saara Kuugongelwa-Amadhila, announced
that the budget deficit is expected to narrow to 5.4% of GDP from
6.4% of GDP in 2013/14, while the GDP growth rate is expected to
average around 5.0%. Government expenditure for the 2014/15
financial year is expected to increase by 26.7 percent to N$60.28
billion. 79.6% of the spending commitment (N$48 billion) is
allocated to operational expenditure. Analysts questioned the
considerable allocations towards wage increases for civil
servants.

Members of the private sector raised a number of concerns at a
public discussion on the Budget, including the need to start
diversifying revenue sources and reduce reliance on the SACU
receipts due to the uncertainty regarding the future of SACU
revenues. Namibia's share of revenue from the SACU is estimated
at R18.1b in 2014, constituting 34.7 percent of the country's
total revenue collection of N$52.5 billion. Several businesses are
also still facing challenges that arise from the slow processing of
VAT refund claims.

It was announced that the non-mining company income tax rate
will be reduced by a further 1% to 32% and the withholding tax on
royalties payable to non-residents will be reduced to 9.6%. The VAT
registration threshold will be increased from N$200 000 to N$500
000.

To broaden the revenue base, the introduction of environmental
taxes was proposed, which will encompass a carbon dioxide emission
tax on motor vehicles, incandescent light bulbs, and motor vehicle
tyres. The Minister also proposed an export levy on primary
commodities and natural resources including minerals, crude oil,
gas, fish and game in order to promote domestic value-addition.

Government undertook to continue with tax reforms to enhance
efficiency, broaden and deepen the revenue base and increase the
competitiveness of the tax regime.

Swaziland

The total amount of resources available in fiscal year 2014/15
is estimated at E15.3 billion (a 19 percent increase from 2013/14).
E5.9 billion (51 percent) of the 2014/15 Budget is projected to be
financed by non-SACU revenue. This is in line with Government's
plan to reduce dependency on SACU receipts which stood at 56
percent in 2013/14.

The balance of the Budget will be financed through grants by
development partners and loan funding to achieve an estimated
deficit of 3 percent of GDP.

Overall recurrent expenditure will increase from E9.7 billion in
2013/14 to E10.6 billion in 2014/15, with wages and salaries
increasing to E4.7 billion in 2014/15.

Capital spending will increase by 44 percent to E3.7 billion in
2014/15. Approximately 81 percent of this funding will be allocated
to completing the ongoing projects, including the completion of
Sikhuphe International Airport, the Sikhuphe-Mbadlane Road, and the
Sicunusa-Nhlangano road.

New capital projects include the construction of the Hotel and
International Convention Centre, the Mhlume Siphon scheme,
rehabilitation of Malkerns Canal and various roads projects.

Swaziland Railways and South Africa's Transnet have
partnered to construct a railway line approximately stretching
146km from Lothair to Sidvokodvo, Lavumisa and into South Africa
through Golela. Significant progress has been made towards the
completion of the feasibility study which is projected to be
completed in the second quarter of 2014. The project is expected to
allow quicker and cheaper access to major ports.

To ensure optimal and responsible exploitation of the minerals
and mining sector, the Government enacted the Mines and Minerals
Act and Diamond Act in 2011. Government has allocated E4.4 million
in the 2014/15 Budget to continue implementing the 2011 Mining
legislation and to encourage mining investors to process minerals
within the Kingdom.

The Government plans to develop an Independent Power Producer
policy in collaboration with the Southern African Trade Hub, to
enable more power generators to enter into the electricity
industry. In addition, hydro power generation capacity at the
Dwaleni Power station along Ngwempisi River is to be increased and
the exploration of renewable energy sources such as wind and solar
power is to continue to be promoted.

Government through the Swaziland Investment Promotion Authority
(SIPA) has prioritized the creation of an investment climate that
is conducive for doing business in the country, through the
implementation of the Investor Road Map (IRM). As a consequence of
implementing the IRM, the country's ranking improved by 10
places in the Global Competitiveness Index from 134 in 2012 to 124
in 2014.

SRA, in partnership with COMESA, has embarked on upgrading the
Automated System of Customs Data (ASYCUDA), which will provide an
improved customs administration platform, including the direct
payment of VAT refunds at the border.

Government vowed to continue supporting the Anti-Corruption
Commission (ACC) and the Directorate for Public Prosecution (DPP)
to enhance their fight against corruption in Swaziland and
allocated E20.2 million to them.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

The new South African Taxation Laws Amendment Bill, 2017 (the "TLAB 2017") was released following the public consultation process for the Draft Taxation Laws Amendment Bill, 2017 (the "Draft TLAB 2017").

Value Added Tax (VAT) is set to make its debut in the GCC in 2018, regardless of the VAT rate being one of the lowest VAT rates across the globe; its introduction will provide an alternative source of revenue for GC governments and contribute towards regional development.

During the International Conference on Tax in Africa held in Abuja from 26 to 28 September 2017, the African Tax Administration Forum launched its "Toolkit for Transfer Pricing Risk Assessment...

Some comments from our readers…“The articles are extremely timely and highly applicable”“I often find critical information not available elsewhere”“As in-house counsel, Mondaq’s service is of great value”

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here

If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you
are granted a non-exclusive, revocable license to access the Website under its
terms and conditions of use. Your use of the Website constitutes your agreement
to the following terms and conditions of use. Mondaq Ltd may terminate your use
of the Website if you are in breach of these terms and conditions or if Mondaq
Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to
read the full text of the content and articles available (the Content). You may
not modify, publish, transmit, transfer or sell, reproduce, create derivative
works from, distribute, perform, link, display, or in any way exploit any of the
Content, in whole or in part, except as expressly permitted in these terms &
conditions or with the prior written consent of Mondaq Ltd. You may not use
electronic or other means to extract details or information about Mondaq.com’s
content, users or contributors in order to offer them any services or products
which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the
suitability of the information contained in the documents and related graphics
published on this server for any purpose. All such documents and related
graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or
its respective suppliers hereby disclaim all warranties and conditions with
regard to this information, including all implied warranties and conditions of
merchantability, fitness for a particular purpose, title and non-infringement.
In no event shall Mondaq Ltd and/or its respective suppliers be liable for any
special, indirect or consequential damages or any damages whatsoever resulting
from loss of use, data or profits, whether in an action of contract, negligence
or other tortious action, arising out of or in connection with the use or
performance of information available from this server.

The documents and related graphics published on this server could include
technical inaccuracies or typographical errors. Changes are periodically added
to the information herein. Mondaq Ltd and/or its respective suppliers may make
improvements and/or changes in the product(s) and/or the program(s) described
herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally
identifies you, including what sort of information you are interested in, for
three primary purposes:

To allow you to personalize the Mondaq websites you are visiting.

To enable features such as password reminder, newsletter alerts, email a
colleague, and linking from Mondaq (and its affiliate sites) to your website.

Mondaq (and its affiliate sites) do not sell or provide your details to third
parties other than information providers. The reason we provide our information
providers with this information is so that they can measure the response their
articles are receiving and provide you with information about their products and
services.

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to
view the free information on the site. We also collect information from our
users at several different points on the websites: this is so that we can
customise the sites according to individual usage, provide 'session-aware'
functionality, and ensure that content is acquired and developed appropriately.
This gives us an overall picture of our user profiles, which in turn shows to
our Editorial Contributors the type of person they are reaching by posting
articles on Mondaq (and its affiliate sites) – meaning more free content for
registered users.

We are only able to provide the material on the Mondaq (and its affiliate
sites) site free to site visitors because we can pass on information about the
pages that users are viewing and the personal information users provide to us
(e.g. email addresses) to reputable contributing firms such as law firms who
author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us
not to disclose your details to any of these parties, please tick the box above
or tick the box marked "Opt out of Registration Information Disclosure" on the
Your Profile page. We and our author organisations may only contact you via
email or other means if you allow us to do so. Users can opt out of contact when
they register on the site, or send an email to unsubscribe@mondaq.com with “no
disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate
registration form. This is a personalised service where users choose regions and
topics of interest and we send it only to those users who have requested it.
Users can stop receiving these Alerts by going to the Mondaq News Alerts page
and deselecting all interest areas. In the same way users can amend their
personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an
identifying user number. The cookies do not contain any personal information
about users. We use the cookie so users do not have to log in every time they
use the service and the cookie will automatically expire if you do not visit the
Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to
personalise a user's experience of the site (for example to show information
specific to a user's region). As the Mondaq sites are fully personalised and
cookies are essential to its core technology the site will function
unpredictably with browsers that do not support cookies - or where cookies are
disabled (in these circumstances we advise you to attempt to locate the
information you require elsewhere on the web). However if you are concerned
about the presence of a Mondaq cookie on your machine you can also choose to
expire the cookie immediately (remove it) by selecting the 'Log Off' menu option
as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example,
advertisers). However, we have no access to or control over these cookies and we
are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement,
and gather broad demographic information for aggregate use. IP addresses are not
linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or
its affiliate sites) are not responsible for the privacy practices of such other
sites. We encourage our users to be aware when they leave our site and to read
the privacy statements of these third party sites. This privacy statement
applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or
contests. Participation in these surveys or contests is completely voluntary and
the user therefore has a choice whether or not to disclose any information
requested. Information requested may include contact information (such as name
and delivery address), and demographic information (such as postcode, age
level). Contact information will be used to notify the winners and award prizes.
Survey information will be used for purposes of monitoring or improving the
functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our
site, we ask them for the friend’s name and email address. Mondaq stores this
information and may contact the friend to invite them to register with Mondaq,
but they will not be contacted more than once. The friend may contact Mondaq to
request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’
information. When users submit sensitive information via the website, your
information is protected using firewalls and other security technology. If you
have any questions about the security at our website, you can send an email to
webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode),
or if a user no longer desires our service, we will endeavour to provide a way
to correct, update or remove that user’s personal data provided to us. This can
usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will
post those changes on our site so our users are always aware of what information
we collect, how we use it, and under what circumstances, if any, we disclose it.
If at any point we decide to use personally identifiable information in a manner
different from that stated at the time it was collected, we will notify users by
way of an email. Users will have a choice as to whether or not we use their
information in this different manner. We will use information in accordance with
the privacy policy under which the information was collected.

How to contact Mondaq

If for some reason you believe Mondaq Ltd. has not adhered to these
principles, please notify us by e-mail at problems@mondaq.com and we will use
commercially reasonable efforts to determine and correct the problem promptly.

By clicking Register you state you have read and agree to our Terms and Conditions